[THE INVESTOR] Korean Air Lines and Asiana Airlines are losing institutional investors’ appetite in the local debt market, industry sources said on Oct. 20.

According to the sources, Korean Air attempted to sell bonds worth 150 billion won (US$134 million) earlier this week, to repay maturing debts, but not a single institutional investor expressed an intention to buy the proposed debt offering.

In February and April, the air carrier also failed to sell its proposed debt worth 400 billion won through a publicly placed debt sale scheme. Instead, Korean Air is seeking to float the debt through a privately placed scheme.



Separately, Korean Air is reattempting to sell $300 million worth of debt with a 30-year maturity this month, after failing to meet investors’ demand for higher coupon rates. But industry sources said it is unclear whether it will be able to push ahead with the debt offering amid lukewarm response.

Recently, Asiana Airlines, a smaller domestic rival, also raised 55 billion won through privately placed debt offerings after failing to attract institutional investors. The airline is rated BBB.

Industry sources said investors are speculating that Asiana Airlines may chip in cash to help its parent Kumho Group take over Kumho Tire, which is up for sale, a deal estimated at 1 trillion won.

(theinvestor@heraldcorp.com)